WhatsApp co-founder perturbed by Facebook’s approach to user data

The plot continues to thicken with Facebook, with WhatsApp co-founder Jan Koum recently leaving his post at the company amid user data disputes. The announcement comes barely one month after Facebook CEO Mark Zuckerberg testified before Congress over the Cambridge Analytica scandal.

WhatsApp co-founders Jan Koum (left) and Brian Acton.

When WhatsApp launched, co-founders Koum and Brian Acton took pains to collect as little data as possible from their users, requiring only phone numbers. At the time of the $19 billion WhatsApp acquisition – one of the largest tech buys of all time – Koum and Acton said Facebook had assured them that WhatsApp would remain an independent service and not share its data with Facebook.

‘If partnering with Facebook meant that we had to change our values, we wouldn’t have done it. Instead, we are forming a partnership that would allow us to continue operating independently and autonomously.’[1]

Around two years after the acquisition, Facebook backpedalled and said it would start disclosing the phone numbers and analytics data of WhatsApp users to Facebook. One year later, the European Commission fined Facebook 110 million euros (around A$175 million) for misleading the Commission during its acquisition of WhatsApp, saying that Facebook incorrectly claimed that it was impossible to combine user data collected by the two companies.

‘WhatsApp end-to-end encryption ensures only you and the person you’re communicating with can read what’s sent, and nobody in between, not even WhatsApp. Your messages are secured with locks, and only the recipient and you have the special keys needed to unlock and read your messages. For added protection, every message you send has a unique lock and key. All of this happens automatically: No need to turn on settings or set up special secret chats to secure your messages.

‘Privacy and security are in our DNA, which is why we have end-to-end encryption. When end-to-end encrypted, your messages, photos, videos, voice messages, documents, status updates and calls are secured from falling into the wrong hands.’

WhatsApp’s end-to-end encryption uses the Signal Protocol.

This essentially means that no one, including WhatsApp and Facebook, can read or view any information that’s sent or received. It’s great from a user privacy standpoint but complicates the WhatsApp monetisation strategy because encrypted data is essentially useless for fuelling targeted advertising. And with Facebook having shareholders to please, it’s important that there’s ROI to justify the huge acquisition cost. WhatsApp is free to download and use, and has no advertising – this is unlikely to change any time soon. The company rolled out WhatsApp Business not too long ago, but it may be a long time before this generates revenue (if it does at all).

Facebook clearly has plenty of challenges ahead. In addition to figuring out a viable monetisation strategy for WhatsApp, it needs to win back trust from its users, appease regulatory bodies, and navigate the complex new laws it has to comply with under the European Union’s General Data Protection Regulation, which comes into effect on 25 May 2018.

Facebook CEO Mark Zuckerberg testified before Congress in April 2018.

For the average Facebook and WhatsApp user like you and me, all of the above won’t make a difference – at least at face value. But Koum’s departure definitely speaks volumes about Facebook’s position on user data and perhaps hints it is only getting worse. This being said, we need to remember that Facebook is a platform with more than two billion users, and WhatsApp isn’t far behind. While these services are ‘free’ for users, the infrastructure and development need to be financed somehow – it just so happens that your data is the hard currency that pays for it all.